UAE bank transfers vs. international payment services

In the UAE, traditional bank transfer services struggle to meet expatriates' expectations, mainly due to transparency and reliability issues. International payment services and local fintechs offer competitive advantages, notably in clarity and predictability. UAE banks aiming to compete effectively in this area must improve their user experience, aligning with fintech standards in cost transparency and digital accessibility.

As part of our in-depth research Mobile Banking Review UAE 2024, we examined the mobile apps of 11 leading banks in the UAE, with a key focus on international payments. As it's well known, a significant portion of the UAE’s population consists of expatriates, for whom such payments are of primary importance. Let’s delve into the competitive dynamics between bank payment services and international payment systems, exploring the factors that either foster or hinder their development. We’ll also consider how banks can maintain their competitiveness and retain clients amidst the growing presence of alternative instant payment solutions.

Transparency and user experience in UAE bank transfers

UAE banks provide a range of transfer services, but transparency and consistency remain concerns. Many UAE mobile banking apps fail to clearly disclose transfer fees or the exact amount recipients will receive. Conditions can change unexpectedly, with some services becoming paid after initiating the transfer.

At Markswebb, we conducted a comprehensive research on digital banking services in the UAE, focusing specifically on the customer experience within mobile banking applications. Our findings indicate that, while banks in the UAE are making significant strides in digital transformation, their customer experience frameworks still show gaps, especially in areas crucial to expatriate users. Our research uncovered that banking apps often lack transparency regarding fees, exchange rates, and transaction timelines, leading to a disconnect between the expectations set by the bank and the actual user experience. This lack of clarity and reliability fosters frustration among expatriate clients, who are increasingly opting for alternative international payment platforms that provide clearer, more predictable transfer processes.

Advantages of international payment providers

International services like Western Union and SWIFT offer more predictable and transparent options, which appeal to expatriates. These services generally provide upfront information on fees and exchange rates, minimizing unexpected costs. This transparency is especially valuable for expatriates sending money abroad, as it ensures better financial planning and reliability.

Furthermore, these providers often offer faster processing times and are accessible through a wide network of physical locations and digital platforms, enhancing convenience and flexibility for users unfamiliar with local banking intricacies.

Growth reasons of fintech and Instant Payment solutions in the UAE

One more thing to note of the Emirates region's digital ecosystem. The UAE’s fintech ecosystem has expanded, supported by initiatives from financial free zones like DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market), which foster innovation in payment solutions. These efforts promote the use of digital wallets, instant transfers, and blockchain technologies, which cater to the needs of a mobile, tech-savvy population. As these solutions evolve, they could challenge traditional banks further if transparency and cost predictability are maintained.

The growth of Instant Payment solutions in the UAE can be attributed to key financial centers advantages, which foster a supportive environment for financial innovation, including fintech and instant payments. Here’s a breakdown of how they contribute:

Dubai International Financial Centre (DIFC)

DIFC is an international financial hub in Dubai, designed to attract financial companies, banks, and fintech startups. It offers tax-friendly conditions and operates under a legal system based on English law. DIFC actively supports fintech startups through initiatives like the DIFC Fintech Hive, which includes a sandbox for testing innovative financial products, thus creating an ecosystem for startups to grow and integrate new instant payment solutions.

Abu Dhabi Global Market (ADGM)

ADGM is an international financial zone in Abu Dhabi, also operating under a legal system based on English law. It provides a wide range of financial services and supports innovations in asset management, insurance, investment, and fintech. ADGM offers a sandbox for fintech companies, allowing startups to test their solutions in a controlled environment with regulatory guidance, which is essential for the development and adoption of instant payment solutions.

Key features and advantages of DIFC and ADGM

• Regulatory support: Both zones offer special regulatory frameworks that encourage the development of fintech, cryptocurrencies, and other innovative financial services, including instant payments.
• Startup ecosystem: DIFC and ADGM provide incubators and sandboxes where startups can safely test products, collaborate with partners, and interact with clients, accelerating the growth of instant payment solutions.
• Tax incentives: Operating in DIFC and ADGM comes with corporate tax exemptions, attracting international companies and driving investment in fintech and payment innovations.

That's exactly the way these financial centers are transforming the UAE into a global fintech hub, attracting major financial institutions and supporting local and international fintech startups. This environment fuels the rise of instant payment solutions.

Well, what can banks offer in response to stay competitive?

Markswebb tips to help UAE banks stay ahead in mobile banking

We will soon share detailed recommendations in our research, which will be available on our website. The public results will provide valuable insights, and for those seeking in-depth analysis, a comprehensive report will be available for order. Subscribe to our newsletter now so you don't miss anything important, or just contact us.

Based on our extensive expertise, we can already affirm that the solution to enhancing the attractiveness of bank transfers through mobile apps is well within reach. At Markswebb, we study international fintech practices and compile best practices, building a repository of successful customer journeys that we continuously analyze to spot emerging trends.

Among the most relevant trends that are shaping mobile banking in the UAE, particularly for expatriate clients, we observe several key developments:

• Seamless digital experience and partnerships with traditional institutions: Collaborations between fintech companies and banks enable fintechs to leverage existing banking infrastructure, which accelerates the adoption of innovative technologies, including those for mobile banking. Such partnerships are vital for creating a fluid, integrated digital experience that appeals to modern customers.
• Generative AI and cybersecurity: With generative AI being increasingly used by cybercriminals for sophisticated phishing attacks, UAE banks can enhance user protection against cyber threats by integrating AI-driven fraud prevention tools within mobile apps. This not only improves security but also builds trust in mobile banking.
• Implementation and growth of Central Bank Digital Currencies (CBDCs): As interest in CBDCs rises, UAE banks may soon find demand for integrating digital currencies into mobile apps. This could enable seamless payments, instant transfers, and more flexible financial products, positioning banks as leaders in the evolving digital payments landscape.
• Banking as a Service (BaaS): Given the regulatory complexities, UAE banks could strategically implement BaaS within mobile banking to offer expanded customer services without requiring direct financial operation licenses. This approach enhances service offerings while staying compliant with regulatory standards.
• Modernization of payments infrastructure: A strong demand for payment infrastructure modernization pushes UAE banks to strengthen mobile app capabilities, supporting instant payments and cashless transactions. Such improvements are essential for sustaining customer engagement and expanding the client base.
• Growth of digital payments and mobile wallets: Following the COVID-19 pandemic, digital payments and mobile wallets have surged in popularity, with contactless payments and online banking becoming mainstream in the UAE. Banks that invest in expanding mobile app functionality to provide secure, convenient digital payments can capture this growing demand effectively.

We understand of course these are general recommendations, and we're ready to unlock the potential behind each one. In the advanced and rapidly evolving UAE market, every right decision is a true treasure.

What else should banks focus on?

• Development of sandboxes and accelerators: In the UAE, sandboxes and accelerators are increasingly being created to support fintech startups, allowing them to test new products and features in a controlled environment. This is particularly valuable for mobile banking, as it enables companies to test interfaces and payment systems before market launch.
• Focus on ESG and sustainability: Our research highlights the growing importance of ESG (environmental, social, and governance) standards for fintech companies. In mobile banking, this can translate to transparent conditions for clients, strengthened data security, and the implementation of solutions focused on sustainable development.
• Data security and protection: With the rise in mobile users, there is an increasing demand for robust security measures. Emphasis is placed on data protection, especially in light of new compliance and security standards.
• Inclusive financial solutions for underserved populations: The fintech sector in the UAE has significant potential for inclusive financial solutions aimed at low-income and underserved groups. This opens opportunities to create accessible products, such as basic banking services through mobile apps.

In conclusion: shaping the future of digital banking in the UAE

We are ready to work closely with the challenges and opportunities of the UAE's banking sector. The UAE has an ambitious digitalization agenda, and our research provides a deep look into how this vision is unfolding for personal digital banking. We pinpoint areas for improvement that can help UAE banks achieve a “the best future” in customer experience and competitiveness. With practical insights and best practices from the global fintech landscape, our recommendations aim to equip UAE banks with the tools to build customer-centered, transparent, and secure digital banking experiences. By aligning with the latest trends and embracing an innovative mindset, UAE banks can unlock new levels of service and stand out in this fast-evolving market.